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Kazamidori column: “Debt” left by President Trump

By Sakaguchi Yukihiro

 

There was a subject that Prime Minister Suga Yoshihide could not bring up during the summit meeting with U.S. President Joe Biden in Washington D.C. in April. Before the summit, Suga intended to directly tell Biden, “I want the U.S. to return to the Trans-Pacific Partnership (TPP) framework someday.” He hoped to get a sense of what the President thinks about the idea.

 

The U.S. is still under the influence of the era of the former administration led by President Donald Trump, when skepticism about the global economy spread. President Biden has said, “The U.S. will not sign any new trade pacts until the nation has expanded domestic investment.” During a policy speech on April 28, too, the President did not touch on free trade but put emphasis on the creation of jobs for the American middle-class.

 

The prime minister also understands that it is not easy for the U.S. to return to free trade even if the Democratic Party, led by President Biden, were to win the midterm elections in autumn 2022.

 

But still, Suga, helped by behind-the-scenes communications between Tokyo and Washington before the summit, tried to place [the TPP] on the agenda. The U.S. reportedly said, “Please wait for a while” or “We want to return [to the TPP] in the future.” That enabled Japan to decipher the Biden administration’s real intention and what it is obliged to say publicly. Japan felt confident that President Biden is not negative about returning to the TPP down the road.

 

The summit meeting lasted for a total of two and a half hours. But the meeting was dominated by discussion on such pressing issues as policy toward China and climate change, leaving no time for Suga to bring up the TPP issue. 

 

The U.S. and 11 other nations reached a broad agreement on the TPP framework in 2015, when President Biden served as vice president in the administration headed by President Barack Obama. But former President Trump announced the U.S.’s withdrawal from the deal in 2017 and the agreement did not come into effect.

 

The former Japanese government under Prime Minister Abe Shinzo was greatly disappointed, as it joined the TPP the hard way by persuading agricultural groups and other interested organizations. Suga negotiated with the U.S. when he was chief cabinet secretary, so he is deeply attached to the TPP. He thinks that the TPP will become the foundation for creating an economic order based on free and fair rules in the Asia-Pacific region.

 

The TPP without the U.S. accounts for only a little over 10% of the global gross domestic product (GDP). But the U.S.’s participation in the TPP would create a huge economic bloc that would account for 40% of the global GDP.

 

Countering China, which is trying to attain greater hegemony in the international community, has become more important, and the U.S. administration shares with Japan a sense of urgency. A senior Japanese government official says: “The prime minister will definitely approach President Biden with the suggestion [to return to the TPP] sometime in the future. It is an issue that he can’t ignore.”

 

China uses pressure tactics to exploit the U.S.’s absence from the TPP. In November last year, Chinese leader Xi Jinping stated that he would give serious consideration to joining the TPP. He apparently made the remark with an awareness of East Asia’s Regional Comprehensive Economic Partnership (RCEP), which was signed by 15 nations around that time, and President Biden, who had just won the presidential race.

 

Some have questioned whether China is serious about joining the TPP. Long Ke, senior fellow at the Tokyo Foundation for Policy Research, says: “China’s intention is perhaps to prevent Taiwan from joining the TPP. The top priority for the Xi leadership is to isolate Taiwan in the international community.” But the Japanese government and the Liberal Democratic Party (LDP) widely expect Taiwan to join the economic deal.

 

The TPP bans national governments from distorting competition by subsidizing state-run enterprises as preferential treatment.

 

LDP member Amari Akira, who has served as a minister in charge of the TPP, says: “China is increasing national involvement in economic activities and that runs counter to the TPP’s principle. China’s entry into the pact is unrealistic.” Amari also says efforts are needed to make the TPP more attractive so that the Biden administration can persuade the American public to return to the accord.

 

Then what needs to be done specifically to make the TPP more attractive to the U.S.? A suggestion compiled by an expert panel of the Ministry of Foreign Affairs (MOFA) in 2016 might be of some help. It said if countries such as Taiwan, South Korea, Thailand, Indonesia, and the Philippines are brought into the pact, the TPP would be the foundation for the U.S.’s Asia Pacific strategy.

 

The suggestion was initially intended to provoke China and encourage its domestic reform by mentioning Taiwan ahead of other nations. Japan expected that China would again reform its state-backed companies as it did in 2001 to join the World Trade Organization (WTO). But its expectation was not met.

 

Eight years have passed since Japan declared that participation in the TPP was part of “the long-range plan for the nation.” The prime minister has no choice but to enhance the value of the agreement by drawing up a roadmap for the U.S.’s return to the deal and bringing in the U.K. and other nations that have applied for the entry.

 

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